Strategic Alliances in the Airline Industry

This report discusses the strategic alliances in the airline industry, focusing on the partnerships between Star Alliance, Oneworld, and Skyteam. It explores the motivations behind these alliances, the benefits they bring, and proposes alternative market entry strategies. Gain insights into how strategic alliances can enhance organizational performance and productivity.

International Business

EXECUTIVE SUMMARY
The alliances of strategic is an agreement between two organization for the purpose of
undertaking a mutually beneficial projects while each retains its independence. The agreement is
less binding and less complex than a joint venture in which two businesses pool resources are
used to create a separate entity. Strategies are the important planning which is formulated by an
individual for the purpose of running their business and developing the organizational
performance. Whenever organization has decided to grow their functions and activities then it
needs to enter in new market where it can grow its business activities. Furthermore, in strategic
partnerships, the partner companies concentrate on realizing synergistic effects. By integrating
crucial resources and production elements, they hope to boost their economic value and, as a
result, their competitive position. As a result, this feature is directly tied to the above- noted
strategic dimension. A company can be enter in to strategic alliance to expand in to new market
and increase their product line and attaining the competitive advantages. In the airline industry,
strategic alliance between Star Alliance, Oneworld and Skyteam. These are the large size airline
industries that are running their business by offering the different types of airline services which
influence the number of customers and attaining the higher productivity. To run any business
there is need to have proper understanding about market and requirement which can be filled by
providing services accordingly and maintain the higher performance.

INTRODUCTION
Strategic alliances is defined as kind of agreement between two and more than two
parties that aims to develop their business activities and go internationally. This is important for
each business organizational to have strategic plans which can be used to provide the right
details about functions and get it complete within time period. For running a business in
changing environment it is needed to have proper planning and solution of all problems which
might be arise anytime. The basis of report bilateral alliances that happened between Star
Alliance, Sky team and One world. All the alliances are running between airline industry that can
help to develop the organizational performance and productivity. In Airline industry there are
different types of services provided to customers which can help to managing the all functions.
Strategies are the important for each business concern as it used to identify the market and
introduce strategies which can help to develop the organizational performance and maintain the
profitability. The report covers alliances between airline industry, literature review, analysis and
discussion by focusing on each activity.
LITERATUERE REVIEW
Strategic alliance is the agreement and partnership between two and more than two
companies who are collected to provide the different types of products and services. The aim of
each organization is to introduce the new services which can influence the number of customers
and increase the organizational productivity. Following airline liberalization in the 1980s,
airlines have faced rapidly increasing international demand. Travellers requested a diverse
variety of prospective destinations, but traditional airlines were unable to meet the demand; as a
result, airlines needed to find business contacts capable of expanding their coverage area. This is
important for each organization to conduct the market and environment analysis and introduce
the products and services accordingly. In an organization number of people are working
collectively and they formulates the strategic planning which can be used to bring the changes in
their services. An Airline industry or sector is defined as service sector that provides air transport
services for travelling passengers and freight. This uses aircrafts to supply these services and
influence the number of people. The management is the responsible person for all functions and
activities and it conduct the market analysis and come to know what kind of services are
demanding by customers. This is most important for each organization to understand how to
influence the people and get ready them to obtain the airline services. The alliances or
1

relationship between organization many be short term and long term in the form of formal and
informal. This can help to increase the organizational performance and productivity effectively.
In competitive environment needs and wants of customers are getting to changes where it
is important to evaluate what services are expecting by customers and how they will be satisfied.
Legacy airlines were also hampered by the rise of low-cost carriers. In both America and Europe,
network functions airlines must compete with so-called “no frills” carriers on short-, medium-,
and recently lengthy routes. Legacy carriers must lower total costs while maintaining or
improving service levels in order to remain competitive. This can help to retaining the all
customers for long period and develop the organizational activities and performance. The three
organization who connected with strategic alliance are Star Alliance, One World and Sky Team
that following the global network to reach the targeted customers and providing them different
services. Star Alliance is the oldest company in airline sector which was founded in 14th May
1997. This organization is providing the different range of airline services to their customers who
comes to different country and domestic country for the purpose of visited anywhere. This can
help to managing all functions by having skilled and intelligent team members who perform well
and solve the all issues.
Strategic alliance refers the agreement or deed between two and more than organizations
that are running their business for common purpose and managing the hall business activities.
This is important for organization to evaluate the market and launch the products and services
which can help to attain the business goals and objectives. The partners companies are getting
benefits and control over performance where task is assigned and completing on the right time.
This is a kind of joint venture where two and more than companies are running and maintaining
the higher performance. Types of strategic alliances are Procompetitive Alliance, Non-
competitive alliance, Competitive alliance, and Precompetitive alliance which are used by
business organization for the purpose of running their business and managing the al function.
The aim of organization is to increase the customer base and provide the higher profitability by
selling the products and services effectively. For example, Apple that is large size organization in
IT sector that provides the different types of products and services and partnered with Sony for
the purpose of global reach and attaining the higher performance. Both partners are entered in to
partnership by preparing the partnership deed and following the all regulations which can help to
develop the organizational productivity. This can help to develop the effective distribution
2

channel, increasing production capacity and others which can help to attaining the partners
objectives and maintain the higher brand image.
It has seen that Star Alliance, One world, and Sky Team are international airline industry
that operates their business in the changing environment and entered in to partnership to share
their business strength and weakness equally so that their business can be grow continuously.
This also helps to maintaining higher performance and productivity in the changing environment.
The management of such organization conduct the market analysis and introduce what kind of
services are required in airline industry. This can help to managing all functions and providing
the higher quality of services. Partnered of the airline industry are growing their business by
entering into new market and providing the different kind of services. The management of such
organization launches the new services in changing environment which influence the number of
customers and develop the organizational performance. The management of such organization
applied the strategic compliance and planning which develop the business productivity and
profitability. This can help to attain the competitive advantages by entering in to new market and
providing the different benefits. The Star, Sky team, and One World is using the strategic
alliances which can be used to develop the organizational performance. The partners are sharing
their business related information which can help to managing and expanding the business in
international market. All organization wants to expand its business in foreign market by
maintaining good relation foreign investors and managing the productivity. Thus, strategic
alliance is used by organization to develop their production and customer base effectively.
Understanding about motivations behind formation of selected International strategic alliance
Motivation is the main aspects for business organization as it is used to develop the
organizational and individual performance. For organization it is important to have good
understanding about employees needs and what they wants which can help to developing the
organizational performance and productivity. Growing worldwide marketing is now the norm,
and these alliances are exploiting growth via partnerships with foreign partners, which both
companies merge and obtain a competitive advantage. They accomplish this through licensing
agreements, cooperative arrangements, cross-shareholder agreement and joint ventures. The
management is require to have proper understanding and knowledge motivation that should be
use for the purpose of getting the work done and complete the work timely. In relation to Star,
Sky Team, and One World organization used the motivational strategies and planning which can
3

help to develop the business performance and productivity. There are different types of
motivational strategies such as Maslow theory, Herzberg theory, and Two factor theory which
can be used to motivate the employees and getting the work done effectively. This bring he
changes and new technology by sharing with all shareholders and employees which can help to
attain the competitive advantages. Instead of taking risks, spending time, and investing large
sums of money to achieve a competitive advantage in industry, they are accessing international
marketplaces by forming an alliance with a company that operates in the same market in
foreign country. So they leave the market that they want to enter for the primary reason of
sharing knowledge, abilities, and expertise, as well as gaining a competitive benefit in the world.
Analysis and Discussion
In the business environment challenges are running continuously where it is important to
provide the better quality of service which can help to develop the organizational productivity.
The challenges in strategic alliance are having competitors, government regulations, lack of
finance, lack of marketing channel, increasing tax rates, and entering in to international market
which can help to establish the business and bring the new technology which develop the
organizational productivity. The management analysis the environment and introduce the new
technology and innovation in their business which can help to develop the business activities and
functions effectively. The incorporation date of Star Alliance is 14 May 19997, One world in 1st
February 1999 and Sky Team has been incorporated for the purpose of proving airline services to
their customers. Oneworld was the smallest organization and Sky Team was youngest and
growing one company that provides the different types of airline services which can help to
managing all performance and productivity. Star Alliance is the largest organization in airline
industry that partnered with Sky team and Oneworld which can help to managing the all
functions and activities effectively. The management and director of companies are using
strategies which can help to attain the competitive advantages and productivity. In this
organization number of employees are working continuously by using their skills and abilities
which can help to develop the business activities and performance. After merger, company is
providing services at global network and maintaining higher productivity. The company is
getting the benefits of e-ticketing, interlinking e-tickets, and increasing visitor base which can
help to enter in to new market which increase the productivity and profitability. In Star Alliance
4

there are 28 airlines, in One World 13 Airline, and 20 Airlines which increase the organizational
sales and profitability. To increase the business performance and customer base there is need to
introduce discount and other programme which can help to attain the business goals in certain
period of time. The loyalty programme which used by selected company for the purpose of
influencing number of customers is used by organization which can help to reach the potential
customers and develop the competitive advantages. The market share of Star Alliance is 23.8%,
One World is 17.8 % and market share of Sky team is 20.6 % which grow the business function
and activities in the changing environment. This can help to attain the competitive advantages in
the changing environment. After merger or strategic alliances the customer satisfaction is
excellent which can help to improve the brand image and managing the higher profitability. The
main challenge which is facing by organization is selecting wrong partner, lack of finance, and
government regulation that might be affect the organizational performance and productivity. In
relation to chosen organization management understand the requirement of their customers
which can help to develop the organizational performance and productivity. This bring the
changes and managing the all functions that also develop the competitive advantages. Business
process alliance connections are becoming increasingly popular as a way for both sides to boost
customer loyalty and investment without expending additional time or incurring major cost
consequences. After identifying a firm with which it can form a mutually advantageous
collaboration, the franchise corporation will be ready to start a connection with the distributors
and secure a good alliance.
Benefits of strategic Alliance
Access to supplementary Service : Strategic alliance is the most attractive benefits
which consider alliance with another business opportunity and providing the supplementary
services. The aim of business organization is to understand the requirement and provide the kind
of services which can help to managing the higher performance and productivity. An alliance
allows a company to offer its clients a whole services and managing the higher performance.
Opportunity to reach new market : To enter in to strategic alliance a business concern
increase their insights and awareness which can help to reach the new and global market. In the
business marker, there is franchise and licencing facilities are available that can help to develop
the business activities and performance in changing environment. This also introduce the
products and services as per customer requirement and attain the competitive advantages.
5

Increasing brand awareness – By using the strategic alliance Star Alliance and Sky
team is increasing the brand awareness between people who lives in other country and managing
the all functions effectively. This can be important for organization to constantly search new one
for customers and present in different ways which can help to managing the all functions and
activities effectively.
Propose a suitable alternative market entry strategy in your recommendations
The aim of business is to enter in to foreign and international market. The management of
such organization is conduct the market analysis and provide the services accordingly which can
help to develop the organization performance and productivity. The selected organization who
wants to grow and enhance their business can be use licencing, franchising, joint venture and
alliances which are the most running method and used to develop the organizational performance
by working with number of companies. Strategic business collaborations can be tremendously
useful to franchise growth, providing opportunity to expand brand exposure through the partner's
channels as well as the opportunity to offer supplemental services to existing ones. It is
recommended to all companies and selected company to use the different strategies and planning
for the purpose of entering in market which can help to develop the organizational performance
and attain the competitive advantages. The management can be use planning for attracting
customers and increase the customer base in international market and attain objectives.
CONCLUSION
Strategic alliance is the connection between group or companies which are formulated for
the purpose of providing products and services. in changing environment it is important to have
proper understanding about market and trend that can help to introduce the kind of products and
services. Motivation is the important aspects which is used by business organization for the
purpose of getting the work done and attaining the higher performance. Under its own
identification number, the commercial airline can publicize and sell the seats given by the
operating airline. This collaboration provides a wider range of flights and, as a result, broader
network coverage. In the changing environment there are different strategies and planning which
is formulated by management for increasing business performance by entering in to international
market and attain higher productivity.
6

REFERENCE
Books and journal
Hult, G.T.M., Gonzalez-Perez, M.A. and Lagerström, K., 2020. The theoretical evolution and
use of the Uppsala Model of internationalization in the international business
ecosystem. Journal of International Business Studies, 51(1), pp.38-49.
van Tulder, R., Verbeke, A. and Jankowska, B. eds., 2019. International business in a VUCA
world: The changing role of states and firms. Bingley: Emerald Publishing Limited.
Kollmann, R., 2019. Explaining international business cycle synchronization: Recursive
preferences and the terms of trade channel. Open Economies Review, 30(1), pp.65-85.
Kaya, T., 2019. Big data analytics for organizations: Challenges and opportunities and its effect
on international business education. Kurdistan Journal of Applied Research, 4(2),
pp.137-150.
Bouncken, R.B., Fredrich, V., Kraus, S. and Ritala, P., 2020. Innovation alliances: balancing
value creation dynamics, competitive intensity and market overlap. Journal of Business
Research, 112, pp.240-247.
Jonnard, C.M., 2020. International business and trade: theory, practice, and policy. CRC Press.
Madura, J., 2020. International financial management. Cengage Learning.
Gundlach, S. and Sammartino, A., 2019. Are international small business owners really that
different?. Cross Cultural & Strategic Management.
Arnold, D.G., Beauchamp, T.L. and Bowie, N.E., 2019. Ethical theory and business. Cambridge
University Press.
Kurt, Y., Sinkovics, N., Sinkovics, R.R. and Yamin, M., 2020. The role of spirituality in Islamic
business networks: The case of internationalizing Turkish SMEs. Journal of World
Business, 55(1), p.101034.
Strašek, A., Pušavec, F. and Likar, B., 2020. Open innovation and business performance
improvement in strategic business alliances. Management: Journal of Contemporary
Management Issues, 25(1), pp.133-144.
Abeuova, D. and Muratbekova‐Touron, M., 2019. Global talent management: Shaping the
careers of internationally educated talents in developing markets. Thunderbird
International Business Review, 61(6), pp.843-856.
Nguyen, N.T., 2020. Performance evaluation in strategic alliances: A case of Vietnamese
construction industry. Global Journal of Flexible Systems Management, 21(1), pp.85-99.
Elia, S., Petruzzelli, A.M. and Piscitello, L., 2019. The impact of cultural diversity on innovation
performance of MNC subsidiaries in strategic alliances. Journal of Business
Research, 98, pp.204-213.
7